We Can't Trust Trump On NAFTA

It is not the United States vs. Mexico, it's corporate power vs. democracy.

05/26/2017 07:56 pm ETUpdated
May 27, 2017

Last week, the Trump administration notified Congress of its intent to renegotiate NAFTA ― the North American Free Trade Agreement. The announcement kick starts a three-month timeline toward NAFTA’s renegotiation.

In normal times, this would be bombshell economic news. NAFTA has been a cornerstone of U.S. trade policy for the last quarter century.

But these are not normal times.

Just hours before the NAFTA announcement, the Justice Department had named a special counsel to investigate collusion between Russia and the Trump Campaign.

It’s hard to make predictions as Trump’s vortex of scandal intensifies, but we do know the NAFTA countdown has started. So, ready or not, here come international negotiations with serious implications for the future of North America, one of the world’s largest trading blocs. To date, Trump has offered no blueprint for reform.

Trump campaigned on a promise to “make NAFTA better,” but as on so many topics, he offers bluster, scapegoating, and grandiose applause lines, but little substance.

There is no question that NAFTA has caused grievous harm to workers, families, communities, and democratic institutions in all three of its member countries ― Canada, the United States and Mexico. But Trump, the petulant billionaire with loyalty to no one is is the last guy you want negotiating this deal. If you’re counting on him, get ready to be thrown under the bus.

When Trump campaigned in rust belt states like Ohio, Michigan, and Pennsylvania he pointed to the decimation wrought by NAFTA era de-industrialization, but he never took aim at the broader policies of global corporate domination embodied both in NAFTA and trade agreements the U.S. has made with 18 other countries since then.

NAFTA includes special rules and extraordinary privileges for corporations. These so-called “investor state rules” undermine sovereignty and democratic rights of citizens in all three countries. Any “new and better NAFTA” would have to do away with these rules.

But Trump has never directly addressed this pivotal issue. A leaked draft of a letter the administration sent to Congress in March makes it clear there is no plan to revoke these “investor state rules” that grant massive political and economic advantages to mega-corporations and billionaires.

Million of U.S. industrial workers, many of them in high wage sectors, lost jobs or opportunities due to NAFTA. This database lists nearly a million vanished jobs documented by the government, but the numbers are certainly much higher – by as much as 10 times say researchers at the Citizens Trade Campaign. Nevertheless, NAFTA’s negative impact was far deeper in Mexico.

The Roots of Mexico’s NAFTA Nightmare

NAFTA took effect in 1994, but the NAFTA era in Mexico really started in 1982.

Mexican elites borrowed billions of “petro dollars” throughout the 1970s, ostensibly to expand their oil industry, but billions were stolen. Unable to repay a staggering debt, Mexico went into default and currency collapse in the summer of 1982. The crisis ended an era of slow but steady economic growth that had gradually expanded Mexico’s middle class.

Mexico’s president initially reacted by nationalizing the country’s banks and circling Mexico’s economic wagons, but the IMF, World Bank, and other representatives of global capital pushed back and forced Mexico to accept draconian “structural adjustments” measures that cut social and health services; eviscerated the education budget, and rapidly eliminated food subsidies that millions of poor Mexicans relied on.

As the economy spiraled downward, discontent grew but so did the numbers of Mexicans seeking opportunities in the U.S. migration created an economic escape valve that may have averted political rebellion.

NAFTA itself was the 1980s brainchild of business elites in Mexico and the United States who had ― under the guise of stabilizing Mexico’s hemorrhaging economy ― looted strategic assets and made billions off the cut-rate privatization of government industries.

In the 1990s George H.W. Bush, Mexican President Salinas de Gortari, and later Bill Clinton all sold NAFTA to the public as a formula to raise living standards and close wage gaps throughout North America. NAFTA supporters said it was a win-win formula that would strengthen democracy and the rule of law in Mexico while U.S. (and Canadian) capital infusions “raised all boats.”

Mexico’s reality did not match those expectations: NAFTA detonated a new round of economic collapse that affected the whole country and set off a 15-year migration tsunami as millions of Mexicans ― bereft of income and opportunities – headed north.

The real border wall ― the one Bill Clinton started construction of in 1995 as part of “Operation Gate Keeper” ― was designed to impede the unprecedented flow of Mexican workers and families relocating to the United States. The fortification of the border continued under Bush and Obama. Millions have been deported and untold thousands of women, men and children have died in the borderlands because migrants are now forced in to take more dangerous and expensive routes that often put them at the mercy of criminal organizations..

During Mexico’s crisis years of the 1980s more than half of all Mexicans lived in poverty and the wage disparity between the U.S. and Mexico was a stunning ten to one.

Today, after 23 years of NAFTA, a lot has changed, but most Mexicans still live in poverty; cross border wage disparities are still around 10 to 1, and the millions of lost jobs in Michigan, Ohio, Wisconsin, Pennsylvania and elsewhere across the United States are not coming back. Income inequality is at all time highs in both countries.

During the NAFTA years, democracy has come under siege by big money in the United States and the results are painfully clear. But in Mexico, the NAFTA years have been even harder. In the face of unyielding structural unemployment, too many young people have become foot soldiers in the wars to control the drug trade to the United States. Large swaths of Mexico’s northern border states ― supposed to be the greatest beneficiaries of free trade – are dominated, and effectively run, by violent criminal organizations.

But don’t expect any help from Trump or the clique of investment bankers and billionaires who run his administration. Like oligarchs everywhere, they thrive when citizens become serfs. In truth they fear citizen power and are doing everything they can to divide, discourage, confuse, and conquer us. But they will not prevail.

Trump has dishonestly turned the legitimate grievances of millions of Americans against NAFTA into a right wing rallying cry, but he should not be trusted. Not for a second.

We do need new agreements that strengthen democracy, support the rights of all workers, and protect our environment. On that scale Trump scores zero.

Here are some resources to help you compare Trump’s promises to the reality of what he is doing.